Stages of a Trader’s Development

Adhere to fundamentals, Innovate, Transcend. -The Master Trader

If you are going to take this course on, then you need to be straight with yourself, and realize which stage of development your are in. And without knowing you, it’s hard to make a judgement…obviously. However, in my experience, I have rarely met a trader, even with decades of experience, that has yet to graduate from the first stage of development, as a “Consistently Profitable Trader.” This is what this course is all about.

There is brilliance in this concept, and one must reflect deeply to truly acknowledge their true level of understanding and skill. All too often we think of ourselves better than we are, we over-inflate our ability and our knowledge. What we are doing is not only lying to ourselves and our loved ones and peers, but we are stifling our own growth by not recognizing the true path forward. The most important step you can take in your learning is to acknowledge this, and do a fair and realistic self assessment, do it now, do it often.

Shu-Ha-Ri is a mental model for the phases of mastery that everyone passes through. The name comes from Japanese martial arts.

The idea is that a person passes through three stages of gaining knowledge:

  • Shu: (protect, follow the rule) In this beginning stage the student follows the teachings of one master precisely. He concentrates on how to do the task, without worrying too much about the underlying theory. If there are multiple variations on how to do the task, he concentrates on just the one way his master teaches him.
  • Ha: (cut, break the rule) The student begins to branch out. With the basic practices and fundamentals working he starts to learn the underlying principles and theory behind the technique. The student seeks out other techniques and integrates that learning into his practice.
  • Ri: (depart, be the rule) Now the student isn’t learning from other people, but from his own practice. He creates his own approaches and adapts what he’s learned to his own particular circumstances.

We can apply this to trading as well. I have 4 levels, but levels 2 & 3 can be considered the same, just different stages of Ha.

  1. Become a Consistently Profitable Trader
  2. Vertical: Scale your most profitable playbook trades
  3. Horizontal: Develop greater diversity of playbook trades
  4. Develop a more sophisticated artful approach to your trading

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